UGC NTA NET/JRF Exam, December-2024 Economics

Total Questions: 100

61. Match List-I with List-II :

List-I (Test/Author)List-II (Econometric Issue)
A. Durbin-WatsonI. Multicollinearity
B. GrangerII. Heteroscedastic Disturbances
C. Farrar-GlauberIII. Causality
D. GlejserIV. Autocorrelated Disturbances

Choose the correct answer from the options given below:

Correct Answer: (a) A-IV, B-III, C-I, D-II
Solution:

Correct Match

List-I (Test/Author)List-II (Econometric Issue)
A. Durbin-WatsonAutocorrelated Disturbances
B. GrangerCausality
C. Farrar-GlauberMulticollinearity
D. GlejserHeteroscedastic Disturbances

62. In the IS-LM framework, as government expenditure (G) increases during a period of normal recession :

(A) Bond prices (PB) fall, the interest rate (r) rises, leading to a fall in the level of investment (I).

(B) Aggregate demand for goods increases, leading to an increase in the level of aggregate output and income (y).

(C) The fall in private investment (I) reduces aggregate income.

(D) People sell bonds (B) to obtain money, and thus the supply of bonds (Bs) increases, causing the price of bonds to fall.

(E) The transaction demand for money (L₁) increases, causing money demand to exceed supply (L>M).

Choose the correct answer from the options given below:

Correct Answer: (b) B, E, D, A, C
Solution:

When government expenditure (G) increases in the IS-LM framework, the following sequence of events occurs:

(B) Aggregate demand for goods increases, leading to an increase in the level of aggregate output and income (Y).

(E) The transaction demand for money increases because income has increased. This causes money demand to rise.

(D) People sell bonds to obtain money, and thus the supply of bonds increases, causing the price of bonds to fall.

(C) The fall in private investment reduces aggregate income

The correct answer (b) B, E, D, A, C. C. FarrarGlauber

63. Which of the following is/are true concerning the International Monetary System?

(a) Gold Exchange Standard
(b) OPEC
(c) Bretton Woods System
(d) Law of One Price
(e) Asian Development Bank
Choose the correct answer from the options given below:

Correct Answer: (d) Only A, C, D
Solution:

The Gold Exchange Standard is an international monetary system in which countries' currencies are linked to the gold standard, but instead of [circulating] gold coins, countries hold gold reserves.

64. Six number of fair dice are rolled simultaneously. What is the probability that each face shows up with a different number?

Correct Answer: (c)
Solution:

Total sample space = 6 × 6 × 6 × 6 × 6 × 6
Total sample space = 6⁶
(Probability) P = 6!/6⁶

65. Match List-I with List-II

List-IList-II
A. Positive consumption externalityI. Riding a motorcycle that makes noise at midnight
B. Positive production externalityII. Honey farming near a flower garden
C. Negative consumption externalityIII. Paper mill dumping waste into the river
D. Negative production externalityIV. Cleaning of a house

Choose the correct answer from the options given below:

Correct Answer: (a) A-IV, B-II, C-I, D-III
Solution:
List-IList-II
A. Positive consumption externalityCleaning of a house
B. Positive production externalityHoney farming near a flower garden
C. Negative consumption externalityRiding a motorcycle that makes noise at midnight
D. Negative production externalityPaper mill dumping waste into the river

66. Arrange the following concepts in chronological order (from oldest to newest):

(A) Adaptive Expectations Hypothesis by Friedman
(B) Relative Income Hypothesis by Duesenberry
(C) Efficiency Wage Hypothesis by Stiglitz
(D) Rational Expectations Hypothesis by Lucas
(E) Effective Demand Problem by Kalecki
Choose the correct answer from the options given below:

Correct Answer: (d) E, B, A, D, C
Solution:

The chronological order from oldest to newest is as follows:
E. Effective Demand Problem Kalecki
B. Relative Income Hypothesis Duesenberry
A. Adaptive Expectations Hypothesis Friedman
D. Rational Expectations Hypothesis Lucas
C. Efficiency Wage Hypothesis Stiglitz

67. In a two-variable regression, the dependent and independent variables are Y and X respectively. The coefficient of correlation between X and Y is 0.8. Which of the following statements is true?

Correct Answer: (b) 64% of the variance of Y is explained by X
Solution:

The coefficient of correlation (r) measures the intensity of correlation between the two variables. A correlation coefficient of 0.8 indicates a strong positive correlation between X and Y.

The square of the coefficient of correlation (r²), known as the Coefficient of Determination, measures the intensity of correlation between the two variables and also tells us what percentage of the variance of one variable can be explained by the other variable.

Therefore, r²=(0.8)²=0.64.
Thus, this indicates that 64% of the variance of Y can be explained by X.

68. The reports on longitudinal data (statistics) regarding the informal sector of India are published by which Ministry of the Government of India?

Correct Answer: (c) Ministry of Statistics and Programme Implementation
Solution:

The reports related to longitudinal data (longterm data) concerning the informal sector of India are published by the Ministry of Statistics and Programme Implementation (MoSPI).

69. Choose the correct option about the 'Pigouvian Tax':

(A) It provides a solution to internalize the total cost of an activity in the market.
(B) It provides a solution to reduce the production of pollutants through government policy.
(C) It helps in increasing factor productivity in the Real Sector (real estate sector).
(D) It works like a deterrent tax.
Choose the correct answer from the options given below:

Correct Answer: (d) Only A. B, D
Solution:

The Pigouvian tax is a type of tax imposed to reduce the negative consequences (negative externalities) of activities in the market. This tax fulfills the following objectives:

A. It provides a solution to internalize the total cost (social cost) of an activity in the market.

B. It provides a solution to reduce the production of pollutants through government policy.

D. It orks like a deterrent tax (or correctional tax) on undesirable activities.

70. The convergence of the time path of the price towards the equilibrium price in a market model with a 'lagged' supply function (backward by one time period) depends on which of the following :

Correct Answer: (b) Whether, Slope of the supply function < Slope of the demand function
Solution:

The convergence of price towards equilibrium in a market model with a lagged supply function (Cobweb Model) depends on the relative slopes of the demand and supply functions.

According to the Cobweb Theorem, if the slope of the supply function is less than the slope of the demand function, price fluctuations diminish over time and the market reaches equilibrium. That is,

  • If, Slope of the Supply Function < Slope of the Demand Function
    Then, the price converges towards equilibrium. P = AR =30
  • If, Slope of the Supply Function > Slope of the Demand Function
    Then, there are explosive fluctuations and the price does not reach equilibrium.
  • If, Slope of the Supply Function = Slope of the Demand Function
    Then, the price exhibits continuous cyclical fluctuations and never stabilizes.
  • If, there is no relation with the slopes of the demand and/or supply functions,
    Then, the convergence completely depends on these slopes.